Insight

Tourist snub hits Hong Kong retail sales

04/18/2016|9:44:37 AM|Chinadaily

Recovery in tourism deemed as key to reviving flagging local economy

Visits by Chinese mainland residents to Hong Kong have taken a dive over the past year, following the local government's decision in April 2015 to restrict visits by Shenzhen residents. At the same time, Hong Kong's retail sales have also fallen. More recently, the city's retail sector has also suffered from rapid appreciation of the Japanese yen, which has eaten into the profits of Hong Kong retailers that sell Japanese products.

Tourism remains a pillar of the local economy, experts have called for the city's government and people to adopt a more open attitude toward mainland visitors, which account for about 77 percent of Hong Kong's inbound tourists in 2015.

Following the restrictions, mainland visits to Hong Kong fell. In 2015, the number of mainland visitors to Hong Kong dipped 3 percent from the previous year to 45.8 million, according to data from the Hong Kong Tourism Board. For the first two months of 2016, the number plunged 18 percent year-on-year to 7.4 million.

Retail sales in Hong Kong plunged 20.6 percent year-on-year to HK$37 billion ($4.77 billion) in February, according to data from the Hong Kong Census and Statistics Department. It was the worst monthly drop in 17 years.

The Japanese yen has gained around 10 percent against the US dollar since the beginning of this year, after two years of deprecation. Because the Hong Kong dollar is pegged to the US dollar, the yen has also strengthened against it, cutting into retailers' profits.

Mainland visitors made 120 million trips overseas in 2015, up 12 percent from the previous year, the Ministry of Commerce said in February. While overseas, these visitors spent about 1.5 trillion yuan - about half of which was spent on shopping.

The government has earmarked HK$240 million to rebuild the image of Hong Kong as a favorable tourist destination.